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Calls to recoup white collar crime earnings; bring in deferred prosecution deals

HSBC agreed to pay a $US1.92 billion ($A2.49 billion) fine as part of a deferred prosecution agreement with US authorities. Photo: Robert RoughThe ill gotten gains of corporates and individuals who have broken the law should be clawed back and deferred prosecution agreements introduced that could see multi-billion-dollar fines for corporate wrongdoing.
Nanjing Night Net

Those are some of the recommendations from the nation’s leading regulators in how to better tackle white collar crime.

Unlike the US, Canada and the UK, Australia currently has no “disgorgement” penalties to allow the Australian Securities and Investments Commission to force repayment of profits from companies and white collar crooks hauled before the courts in civil actions.

Currently ASIC must instigate separate Proceeds of Crime actions to recoup the winnings of corporate crooks. It argues in a submission to a Senate inquiry that disgorgement policies would up the ante in dealing with companies and individuals who face a $1 million maximum financial penalty regardless of how much profit is made on the dubious transactions.

ASIC said in its submission disgorgement that orders can “offer significant deterrent value by removing the benefits gained from the wrongdoing and reducing the likelihood that wrongdoers can consider penalties to be merely a business cost”. Deferred prosecutions

Australia also does not have deferred prosecution agreements whereas in the UK and the US such agreements have been used to allow companies and individuals to avoid convictions while also wearing huge financial penalties. The Australian Federal Police used its submission to argue for the introduction of such agreements here.

The AFP’s submission said it supports the introduction of the Deferred Prosecution Scheme which it believes would encourage more corporate entities to co-operate with the AFP’s investigations, particularly in large-scale fraud and foreign bribery investigations.

“The AFP is currently conducting two investigations with companies that are willing to co-operate on their respective foreign bribery matters. One of these matters was referred to the AFP by the company itself,” the AFP submission said.

“In the absence of DPA arrangements, it is noted that the companies may face charges irrespective of their ongoing co-operation.”

The submissions come as ASIC is set to receive increased powers and have $120 million in funding stripped in recent years reinstated.  Tougher penalties

Separately, the Commonwealth Director of Public Prosecutions in its submission to the inquiry said the penalty for the white collar crime of “general dishonesty” should be lifted to 10 years’ jail from the current maximum of five years, while sentences for fraudsters should be linked to how much money they rip off their victims.

Concerns about foreign bribery by Australian corporations have hit new heights in recent months, following Fairfax Media’s exposes of bribery investigations at Tabcorp and the Unaoil scandal which has embroiled the company once known as Leighton Holdings, CIMIC.

The Attorney General’s office is already seeking submissions over the potential introduction of the Deferred Prosecution Scheme. New offence sought

The AFP has also called for the government to amend the criminal code to include “knowingly concerned” as an additional form of secondary criminal liability to extend to corporate entities and the ringleaders of organised crime syndicates.

Under the current system, often ringleaders can only be charged with aiding and abetting a crime which carries a much lower sentence. However, the Senate rejected the introduction of a charge for “knowingly concerned” in the Crimes Legislation after Labor and the Greens did not support the change.

The AFP submission also sheds light on the troubles the AFP has in investigating and pursuing charges for companies with rotten corporate cultures despite the Criminal Code allowing for such charges.

ASIC’s submission highlights the inconsistencies in how civil penalties are handed down by the court. Currently the maximum pecuniary civil penalty for breaching the Corporations Act is $200,000 for an individual and $1 million for a corporation.

“These amounts have not kept pace with inflation and, in any case, are proportionately low given the seriousness and impact of civil penalty matters,” the submission said.

ASIC also calls for extending penalties for breaches of the financial services and managed investments provisions of the Corporations Act for minor breaches by providers. Currently, ASIC can only suspend or cancel an Australian Financial Services Licence.

This story Administrator ready to work first appeared on Nanjing Night Net.